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Sri Lankan rupee edges down on unusual year-end dollar demand

COLOMBO, Dec 29 (Reuters) – The Sri Lankan rupee traded slightly weaker on Thursday due to unusual year-end importer dollar demand, while moral suasion by the central bank capped further losses in one-week rupee forwards, dealers said.

Dealers said the market was bracing for some depreciation in the rupee in January after the central bank said on Friday that depreciation of the currency was not necessarily negative for the economy.

Rupee forwards were active, with one-week forwards trading at 150.15/25 per dollar, down from Wednesday’s close of 150.10/25.

Spot-next forwards and the spot rupee were hardly traded, dealers said.

"We expect some kind of depreciation in the new year after the central bank’s statement last week," a currency dealer said on condition of anonymity.

"The central bank does not want to trade one-week forwards below 150.15. But there is unusual importer demand. Usually we do not see this kind of importer demand in the year-end."

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